The yuan’s depreciation is most keenly felt by the country’s airlines, as the weaker currency makes aircraft and jet fuel more costly, while its weaker buying power abroad deters outbound tourism and crimp their revenue. “A weaker yuan will typically hurt airlines the most because they have to pay for aircraft and jet fuel in US dollars but generate most of their revenue in yuan,” said Victor Au, Delta Asia Securities’ chief operating officer. China Eastern Airlines placed orders for 20 Airbus aircraft this year. “The yuan’s depreciation also lifts interest costs for airlines which raise a lot of dollar-denominated debt,” Au said. The yuan weakened 3.1% last year, leading to an 18-fold surge in foreign exchange losses, or US$2.5b, for the mainland’s three biggest carriers – China Southern Airlines, Air China and China Eastern. As much as 80% of their debt was denominated in dollars last year, according to Bloomberg data. The yuan’s deterioration has gathered pace this year with a 6.2% drop against the dollar. “Accelerated yuan depreciation since October [last year] implies higher risk of foreign exchange losses for Chinese airlines,” said Edward Xu, an analyst with Morgan Stanley who has an “underweight” recommendation on Air China’s shares. The broker cut its earning estimates for all mainland airlines from this year to 2018. Next year’s earnings of the Big Three are expected to decline by between 9 and 10% for every 1% that the yuan weakens against the dollar, according to a research report by Macquarie, which is recommending investors to “sell” airline shares. Adding to the carriers’ woes, analysts are also expecting the price of jet fuel to increase, reversing the previous declining trend.<br/>
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US airlines are posting record profits, awarding hefty pay raises and winning over longtime skeptics like Warren Buffett’s Berkshire Hathaway Inc. The missing ingredient: proof that the industry can weather a downturn. Previous airline booms were followed by busts that eventually forced all the biggest full-service airlines into bankruptcy. The difference this time is an eight-year era of mergers that stabilized the industry by shrinking the number of major carriers to four from nine. Adding to that is a profit-boosting, 56% drop in the price of jet fuel since early 2014. Airline labour groups have taken advantage of the good times to claw back some of the pay surrendered as the industry restructured and racked up $53b in losses in the decade ending in 2011. New contracts have added at least $1.35b to the operating costs of the four biggest US carriers this year, and will add $1.9b more in 2017, according to Savanthi Syth, a Raymond James Financial Inc. analyst. That’s raised concern that the payouts may come back to haunt the companies. “You have to be a little leery of just going crazy when it comes to pay and benefits,” said Jerry Glass, president of consultant F&H Solutions Group and a former US Airways executive. “This is an industry that is always hit by some kind of extraneous event. We don’t know when, we don’t know how severe it’s going to be, but it will happen at some point.”<br/>
Israel has accused Iran's Islamic Revolutionary Guard Corps (IRGC) of using commercial airline flights to ship weapons to the Lebanese Shi'ite Muslim group Hezbollah. In a letter to the UNSC on Tuesday, Israeli UN Ambassador Danny Danon accused Iran of using airlines such as Mahan Air. The US has sanctioned the Iranian carrier for providing services to the Quds Force, a special forces unit of the IRGC, as well as Hezbollah. Iran's mission to the UN and Mahar Air were not immediately available to comment on the accusations. Danon wrote that Quds Force officers pack arms and materiel into suitcases that are transferred to Hezbollah either by commercial flights to Beirut or commercial flights to Damascus in Syria, and then transferred by land to Lebanon. "It is clear that Iran is still the primary supplier of arms and related materiel to Hezbollah, in blatant violation of numerous Security Council resolutions," Danon wrote. "The Security Council must condemn Iran and Hezbollah for the violation of its resolutions." Danon's letter to the 15-member Security Council, seen by Reuters, did not offer any evidence to support his accusations.<br/>
ABX Air, which flies packages for Amazon.com and DHL Worldwide Express, asked a federal judge to force striking pilots back to work and thwart a threat to disrupt deliveries during the holiday shopping season. About 250 pilots employed by ABX Air, a subsidiary of Air Transport Services, are striking to protest alleged staffing shortages at the cargo carrier. ABX Air operates 35 flights a day for Amazon and 45 daily flights for DHL, according to the Airline Professionals Association, Teamsters Local 1224, which represents the pilots. ABX said in its complaint that 26 flights, loaded with 1.25m pounds of cargo, were grounded Tuesday. The retail industry is gearing up for its busiest period, with shoppers increasingly shunning brick-and-mortar stores and shopping from their phones and computers. Online spending in November and December will increase 11% this year to $91.6b, according to an October forecast from Adobe Systems. "While they go through this court process, planes are not flying," said Satish Jindel, president of SJ Consulting Group. "Obviously that is of concern to a company like DHL and Amazon." But he said Amazon can shift some volume to UPS and FedEx and can also find some smaller contract parcel shippers to move packages if needed. The pilots are picketing outside ABX Air's headquarters in Wilmington, Ohio, and DHL's North American hub at Cincinnati/Northern Kentucky International Airport.<br/>